EU official: Confiscation of Russian assets could cause a global crisis

(Dan Tri) – Europe needs an `emergency mechanism` in case Russia’s plan to finance Ukraine with money backfires, because Moscow’s response could negatively impact the global financial system.

Central Bank of Russia (Photo: TASS).

Brussels is looking for legal loopholes to send frozen Russian assets to Ukraine.

The West has frozen about $300 billion in Russian central bank assets since Moscow launched a special military campaign in Ukraine more than two years ago.

Brussels-based Euroclear holds about $205 billion of that, and the EU is said to be accelerating a decision to send Kiev a first round of aid of up to $3.2 billion from profits generated from the assets

However, Brussels will have to `ensure that there are no violations of financial stability,` an anonymous EU official told Reuters on March 12.

`When the war is over and all solutions are given, all the detained funds will also be transferred to Ukraine. But we need to have a significant amount of money in Euroclear, because Euroclear will face very

According to this official, if the West confiscates funds, the Russian central bank may confiscate about 33 billion euros of Euroclear located in the country’s securities depository in Moscow.

Moscow has repeatedly stated that it will respond proportionately if the West confiscates Russian assets.

EU officials warned that if Western banks sued Euroclear for losing money investing in Russia, Euroclear could run out of money completely.

Euroclear has more than 37 trillion euros in assets in custody globally, but if it loses liquidity amid multiple lawsuits, the Belgian central bank could be forced to withdraw its license, causing

Some Western countries still disagree regarding the use of Russia’s frozen assets to aid Ukraine.